/IRBIS, Andrey Tsalyuk, September 15, 04/ - The resolution of the
government of the Republic of Kazakhstan #941 dated September 8, 2004
approved new rules for emission floatation, circulation, servicing and
redemption of government securities (the Rules).
The rules will be enacted on January 1, 2005.
The resolution also cancels several legal documents of the government from
the moment of a last redemption of government securities issued prior
to the Rules approval (the list of legal documents is attached to the
resolution).
According to the Rules, the Ministry of Finance will issue following
securities:
- MEKKAM - government short-term treasury bills (GKKO);
- MEOKAM - government mid-term treasury bonds (GSKO);
- MEUKAM - government long-term treasury bonds (GDKO);
- MOIKAM - government mid-term indexed treasury bonds (GSIKO);
- MUIKAM - government long-term indexed treasury bonds (GDIKO);
- MEUJKAM - government long-term saving treasury bonds (GDSKO);
New MEKKAM are not different from those issued at present time. As
previously, these are discount non-indexed bonds with face value of KZT
100, 12-month circulation term divisible by 3 months. Time basis -
actual/actual.
New MEOKAM differs from those currently circulating on the market. The
circulation term is limited to 5 years and time basis - 30/360. Face value -
KTZ 1,000.0. Bonds holders will receive semiannual coupon with fixed rate.
This coupon rate is used as an object for auctioning.
MEUKAM is a new type of government securities (GS). Their face value is
KZT 1000, circulation term exceeds 5 years and should be divisible to 1 year
(the latter is stipulated by the coupon payment period). Bonds have fixed
coupon paid off each year. Most likely, this coupon rate will be also used as
auctioning object. Time basis - 30/360.
MOIKAM bonds are close to MEIKAM. The difference is a circulation period
must be divisible by 6 months and lasts from 1 to 5 years. Settlement basis -
30/60 with semiannual coupon payment. The methodology of inflation-
indexed payment is similar to MEIKAM (yet the Rules stipulate other
formulas). Probable auction object is fixed coupon rate (minimal level).
MUIKAM bonds are designed in the same way. In contrary to MOIKAM
circulation term should be higher than 5 years and divisible by 12 months
with annual coupon payment.
The most interesting introduction is MEUJKAM bonds. These securities are
similar to structure of MUIKAM. The difference is their mandatory floatation
only among accumulative pension funds of Kazakhstan. A half of their
maturity period they will circulate only among these investors. No limitations
are set for the rest of their circulation term. The Rules stipulate that
emission volume of MEUJKAM must be equal to 30% of total emission volume of GS
for each year.
The Rules also set following floatation methods for government bonds:
auction, additional floatation, additional offering, subscription and other
methods set by internal documents.
Other important introductions are following:
Financial agent notion - is set as "a legal entity floating on behalf of an
issuer government bonds according to agent corresponding agreement". It
follows that Kazakhstan Stock Exchange could also operate as a financial
agent using stock exchange floors and corresponding KASE regulation.
A primary deals notion - is set as "professional participant of securities
market admitted to floatation of government bonds".
Another important introduction is more detailed description of circulation
beginning and termination dates as well as definition of first and last
interest accrual dates.
The Rules kept option of prescheduled redemption of GS. However, new
edition stipulate that prescheduled redemption must be conducted only after
full or partial repurchase of securities by the issuer on the secondary market
using existing market prices. The issuer must inform its financial agent on
repurchase of securities a month prior to planned date. In turn, the financial
agent, must inform primary agents on repurchase during following 5 days.
The full Russian text of the Rule are published at
http://www.kase.kz/mix/newgko.pdf.
[2004-09-15]